Bethany McLean, a 31-year-old Fortune magazine reporter with an impossibly soft voice, decided to take a hard look at Enron last January.

The Houston energy company didn't like her questions. The CEO, Jeffrey Skilling, called her unethical and hung up on her. The chairman, Kenneth Lay, called Fortune's managing editor to complain. The chief financial officer, Andrew Fastow, flew to New York to tell McLean and her editors that Enron was in great shape.

McLean refused to be intimidated. "The company remains largely impenetrable to outsiders," she wrote in Fortune's March 5, 2001, issue. "How exactly does Enron make its money? Details are hard to come by because Enron keeps many of the specifics confidential. . . . Analysts don't seem to have a clue." All this amounted to a "red flag" that "may increase the chance of a nasty surprise."

The story sank without a trace. "At that point the coverage of Enron was pretty glowing," McLean says. After all, the stock had soared 90 percent the previous year and was selling for $76 a share.

Now that the company has collapsed amid charges of financial chicanery, devastating its employees' retirement funds, Enron is the hottest story in the country. Political reporters joined the fray after learning that Enron had sought help from the Bush White House. Teams of business journalists are digging into the largest corporate meltdown in American history.

But as in the savings and loan debacle a dozen years ago, it took news organizations too long to piece together the clues.

"It's fair to say the press did not do a great job in covering Enron," says Steve Shepard, editor-in-chief of Business Week magazine, which ran only briefs on the company's financial problems until a cover story in November. "Enron was really a systemic failure of all the checks and balances we have on corporate governance: integrity of management, board of directors, audit committee of the board, outside accounting firm, Wall Street analysts and ultimately the press. And all of us failed."

There were some notable early efforts. Last May, the Wall Street Journal ran a front-page story on Lay getting a half-hour meeting to lobby Vice President Cheney on the administration's energy program. The story noted that over the years Enron had donated nearly $2 million to President Bush, Lay's longtime friend, and that some top administration officials had worked for Enron.

"I feel pretty good about what we've done on Enron," says Alan Murray, the Journal's Washington bureau chief. "What we clearly did not understand was that it was heading for a disaster."

The problem, he says, is that such stories often turn on "arcane and technical" practices. "The press doesn't pay as much attention to some of these regulatory issues that have more impact on the world than the political issues we do pay attention to," Murray says.

If company auditors -- in this case, Arthur Andersen -- don't raise questions, "it's very hard to know where to look," says Larry Kramer, chief executive of CBS MarketWatch.com. "We didn't get a lot of rumblings. Our coverage was robust, but was still based on events after the fact."

A dramatic decline in stock is not necessarily a warning of foul play, says Kramer, noting that his own company went public at $97 a share and the stock is now worth $4. "People just got dazzled by the size of the business," he says of Enron.

David Morrow, editor of TheStreet.com, says the press is "too reactionary. It's too easy for the business press to look at what the analysts are saying." Most Wall Street analysts had a buy rating on Enron stock.

Indeed, only one group wanted Enron's stock to tank: the short-sellers, professional traders who bet on a stock's decline. One short-seller, Jim Chanos of Kynikos Associates, suggested to Fortune's McLean that she look at Enron's Form 10-K, a required annual filing with the Securities and Exchange Commission.

McLean says she understood Chanos's motive but was struck by the document. There were "strange transactions," "erratic cash flow" and huge debt. "It made you wonder, if their business was so phenomenally profitable, why they had to be adding debt at such a rapid rate," she says.

But the story was hard to write: "You can't just spout off about derivatives and mark-to-market accounts and expect people to get it."

Ironically, Fortune's own surveys had named Enron America's most innovative firm for six straight years, and much of the coverage was similarly upbeat. Last January, a Houston Chronicle story was headlined: "Houston has $100 billion company; Enron Corp. sets records for sales, earnings in 2000."

There were a few critical pieces, but they mainly focused on politics.

In February, the Los Angeles Times reported on the close ties between Lay and the president, noting that Bush had flown on Enron jets during the campaign. In March, The Washington Post ran a piece on Lay's growing influence. In May, the New York Times quoted the federal government's top electricity regulator, Curtis Hebert Jr., as saying Lay had offered to support his continued tenure if he changed his views on energy deregulation. Hebert says he declined. Bush replaced him months later.

In August, at a Fortune conference in Aspen, Lay told Rik Kirkland, Fortune's managing editor, that Enron really disliked McLean's story. A week later, Skilling quit as CEO after just six months on the job, calling it a "personal decision."

"The main point of failure was when Skilling resigned, because unless he had cancer or something it was inexplicable," Business Week's Shepard says. "The failure of the press was not saying, 'What's going on here?' " Business Week talked to Skilling off the record but could shed no further light on the situation.

To be sure, journalists were skeptical. "The abruptness of the departure left many analysts questioning whether a series of setbacks the company has suffered played a part in the decision," the New York Times said. Enron's stock, which had fallen by 50 percent since January, dropped another 14 percent in two days.

Some commentators unloaded on the company. "Until they clear this one up, Enron's a goner," former money manager Jim Cramer wrote on RealMoney.com.

But hard information was scarce. "It's almost as if you have to use forensic accountants when you're doing a company story because many companies are using very aggressive accounting techniques that are perfectly legal," Shepard says.

Enron fired Fastow in October for overseeing questionable off-the-books partnerships, and in November the company admitted overstating its profits by $600 million. But most papers played these stories on their business pages.

Even Enron's Dec. 2 declaration of bankruptcy failed to make the front pages of USA Today, The Washington Post, the Boston Globe and the Philadelphia Inquirer. The CBS, NBC and ABC evening newscasts each gave the announcement two sentences. The media were still heavily focused on the war in Afghanistan.

Now that Enron's stock has been booted off the New York Stock Exchange, Fortune staffers can't say enough about the way McLean defied both Enron executives and conventional wisdom.

"It was a gutsy thing to do," Kirkland says. "We trusted her. When you look back it's obvious: Why weren't we all asking these questions?"